Agreement on a bailout plan for the faltering American financial system could come by the end of the weekend, according to one of the plan's key negotiators.

"I'm convinced that by Sunday we will have an agreement that people can understand on this bill," Massachusetts Rep. Barney Frank said Friday afternoon at a news conference in Washington, D.C.

House Speaker Nancy Pelosi added that "progress is being made," although neither she nor Frank — a prominent Democrat during the eight days of talks — provided details.

Earlier Friday, U.S. President George W. Bush called on Congress to quickly approve a $700-billion US plan to bail out financial firms that are coping with billions of dollars in bad debt linked to the collapse of the U.S. housing market.

President George W. Bush urged that negotiations continue to finalize legislation on the financial rescue package on Friday. (AP Photo/Pablo Martinez Monsivais)

"There are disagreements over aspects of the rescue plan," he said during a brief statement issued from the White House, "but there is no disagreement that something substantial must be done."

The United States needs the financial bailout package, and Republicans and Democrats must "rise to the occasion" and move quickly to approve the plan and stabilize the markets, Bush said.

The crisis in the U.S. financial sector was the lead issue in Friday night's presidential debate between Republican John McCain and his Democratic rival Barack Obama, with both agreeing that Congress needed to take swift action.

McCain, who has been criticized by Democrats for helping stall the plan's approval, said he hoped to be able to vote in its favour.

Obama said that although the language on an agreement is not yet precise, "constructive work is being done." However, he cautioned, major oversight was needed for a plan of such gigantic monetary proportions.

The reason the plan is "big and substantial is because we've got a big problem," Bush said Friday.

Any "big proposal" comes with challenges to get it legislated, he said, and members of Congress want the opportunity to express their opinions.

"The legislative process is sometimes not very pretty, but we are going to get a package passed."

Bush, who usually leaves the lobbying to others, was on the phone repeatedly Friday with lawmakers, reported the Associated Press.

Vice-President Dick Cheney, who is particularly close with the conservative wing of the party, also cancelled a trip to devote the day to keeping in telephone contact with the Hill from his White House office.

Signs of continued divisions

But there were signs of continuing division on Friday. House minority leader John Boehner demanded that "serious consideration" be given to a radically different proposal that provides no government money up front for a financial rescue.

"If such consideration is not given, a large majority of Republicans cannot and will not support" the administration's plan, Boehner said in a letter to Pelosi.

At a press conference on Friday morning, Democratic Senate majority leader Harry Reid attributed the stalled talks to divisions among the Republicans.

Reid said Democrats will be working with the Bush administration to modify the proposed bailout package to make it better for taxpayers and homeowners.

"The American taxpayers, if they have to take the risk, they should get some of the rewards," he said.

An agreement will depend on conservative House Republicans "dropping this revolt" against Bush's plan, said Frank, who is the House financial services committee chairman.

Frank said Friday morning he did not expect to see a substantially different proposal at Friday's discussions from the plan the Bush administration has been trying to sell to lawmakers.

Talks stalled on Thursday

Talks on the financial bailout package stalled on Thursday night after Bush met with presidential candidates John McCain and Barack Obama, and congressional leaders. (AP Photo/Pablo Martinez Monsivais)Bipartisan efforts to work out a deal initially stalled Thursday night.

The CBC's Alison Smith, reporting from Washington, said the obstacle appeared to be a group of conservative Republicans in the House of Representatives whose constituents don't like the idea of giving away taxpayers' money to save financial firms from their own folly.

"The House leadership appears to be falling in line, but those Republicans are needed on the floor of the House for this vote," she said. "The Democrats are not going to proceed with this kind of vote — don't want to be seen as passing the president's legislation — if they haven't got Republicans on side with this, too."

Senator Richard Shelby, an Alabama Republican, said many GOP lawmakers dislike the White House proposal.

"Basically, I believe the … proposal is badly structured," Shelby said. "It does nothing basically for the stressed mortgage payer. It does a lot for three or four or five banks."

But White House press secretary Dana Perino said Friday the administration is still confident a deal will be reached by Monday.

Alternate proposal drafted by conservative Republicans

A rival proposal being pushed by House conservative Republicans is an "an ambush plan," Frank said.

The plan drafted by House conservatives would have the banks, financial firms and other investors that hold mortgage-backed securities pay the Treasury Department to insure them rather than have those investments bought with taxpayer dollars.

Rep. Paul Ryan, R-Wis., a chief sponsor, said it was clear that Bush's plan "was not going to pass the House."

But some Democrats said the same was true of the conservatives' plan, which calls for tax cuts and insurance provisions the majority party appear unwilling to accept.

White House counsellor Ed Gillespie said the administration was working with lawmakers on how some elements of the rival House GOP proposal could be incorporated into the package.

"There are some things that may not work and some things that may work," Gillespie said.

At one point Thursday, congressional leaders said a tentative agreement had been reached and appeared to be headed towards approval at a White House meeting that included Obama and McCain.

Meanwhile, another U.S. bank has been crippled by bad debt in the mortgage market. Washington Mutual Inc. collapsed on Thursday. JP Morgan Chase & Co. Inc. has taken the bank over.

With files from the Associated Press